Money Talk

Student Loan Payments May Be Withheld from Your Social Security Check

If you’re a parent or grandparent considering taking out student loans for a college-bound student, here’s something that will make you think twice. Older adults who’ve fallen behind on federal student loans risk getting smaller Social Security benefits because the federal government is withholding a portion that money — and the number of people in this situation is increasing.

If they don’t find a way to pay that debt before they claim Social Security retirement benefit, they could be facing cuts as high as 15 percent, or $190 from a benefit of $1,234. Recipients who collect $750 a month or less won’t be docked, according to the SmartMoney report.

Meanwhile, the amount of outstanding student loan debt in this country, an astounding $1 trillion, continues to threaten the financial well-being of young and old alike, with no end in sight. Soaring tuition places a huge burden on college graduates who face paying back their loans while they struggle to find work in the worst jobs market this country has seen in decades.